Counterfeit Money Order Scam

An increasingly common scam is that of the fake money order.  The type of money order most often used for these scams is United States Postal Money Orders, perhaps because people are more trusting of them and think of something that “official” as being pretty much the equivalent of cash.

The typical way the scam works is someone who has a listing for an item for sale on a site like eBay or Craigslist will close a sale with a buyer – usually from another country (often Nigeria, which is where a lot of these scams originate) – and the buyer will pay by Postal Money Order.  Furthermore, the buyer (supported by some implausible, convoluted backstory) will send a money order for substantially more than the purchase price, asking that some or all of the difference be refunded to him when the item is shipped.  The money order is counterfeit, the “refund” money the seller sends is not, and the seller has been scammed.

Before we get to the matter of physically examining a Postal Money Order to see if it is legitimate, the more important point to be made is that this transaction should never occur in the first place.  From the get go the seller should refuse this form of (over)payment.

Why?  One, there’s really no legitimate reason for someone to overpay for an item and get the difference refunded.  If the sale price is $150, don’t accept payment of $500 and send $350 back.  If someone proposes that kind of deal, walk away.

Two, even banks or other professionals may not know immediately that the money order is not genuine, and if and when they do figure out that it’s not, you as the seller are on the hook for the money.

This is a point many people do not realize, so it needs emphasis.  Many people think that if they cash or deposit a check or money order at their bank and it’s accepted, that settles it.  Or at the latest if a hold is initially put on it and soon lifted to free up the funds, then that settles it.  Wrong.  A bank is not accepting responsibility for the item by clearing it.  If they figure out a day or a week or a month or six months later that it’s no good, then that money will be taken right back out of your account.

Of course they try to avoid this because it’s terrible customer relations to give one of your customers money and then realize you have to pull it back, so, for instance, tellers will look closely at a check or money order in order to try to catch a bad one early.  But the fact remains, just because it gets past the teller, or just because the bank doesn’t inform you for X amount of time that there’s a problem with the check or money order you deposited, that doesn’t guarantee anything.

So, bottom line, don’t accept an overpayment by money order from Nigeria, regardless of whether it (temporarily) gets by your bank.

Now as far as the actual physical examination of the Postal Money Order, for cases where you do agree to accept payment by money order, there are two main things to look for that tend to be the hardest to counterfeit.

One, a watermark of Benjamin Franklin should be visible on both the front and reverse side of the money order when held up to the light.

Two, running vertically just to the right of the Franklin watermark should be a dark security thread, with the letters “USPS” facing backward and forward.

Another possible clue to look for is money orders in the wrong denomination.  Domestic Postal Money Orders only go up to $1,000, and International Postal Money Orders only go up to $700.  If you’re given one that exceeds these amounts, then you know it is counterfeit.

The vast majority of counterfeit money orders will be discoverable if you simply examine them closely enough with the naked eye.  However, a very, very small number are so skillfully made that even an expert might be fooled.  So to really be on the safe side, you may want to consider simply not accepting money orders at all.  Methods such as e-checks and PayPal are within reach of virtually anyone nowadays; surely anyone needing to send you money can make use of these methods rather than money orders.